CANCOM SE — Interim / Quarterly Report 2011

Aug 22, 2011

Interim Report

Q2/2011

»Leading provider of IT infrastructure and professional services«

T a ble of contents

Section	Page
Table of contents	02
Key figures	03
Preface	04
Consolidated interim management report Q2	05-11
1) CANCOM's business and the generel economic situation 2) Earnings, financial and assets situation of the CANCOM group 3) Shareholdings of the Executive and Supervisory Board 4) Events of particular significance after the reoprting date 5) Risk report 6) Opportunities report 7) Forecast 8) Responsibility statement by the management Balance sheet	06-07 07-10 10 10 10 10 10-11 11 12-13
Income statement
Consolidated cash flow statement – IFRS	15
Consolidated statement of changes in equity – IFRS	16
Statement of comprehensive income – IFRS	17
Segment information – IFRS	18-19
Appendix	20-23

Key figures

Overview of key figures CANCOM group in € million	01/01/ - 06/30/2011	01/01/ - 06/30/2010	Changes
Revenue	251.5	204.4	+ 23.0 %
Gross profit	77.3	67.1	+ 15.2 %
Gross margin	30.7 %	32.8 %	- 2.1 %
EBITDA (adjusted)	10.7*	5.3*	+ 101.9 %
EBIT (adjusted)	8.8**	3.9**	+ 125.6 %
Net profit for the period (adjusted)	5.3**	2.2**	+ 140.9 %
Earnings per share (in € / adjusted)
from continuing operations
(diluted)	0.51**	0.21**	+ 142.9 %
Adjusted average number of shares
(in 1,000) (diluted)	10,391	10,319	+ 0.7 %
Employees as of 30 June	2,011	1,894	+ 6.2 %
in € million	06/30/2011	12/31/2010	Changes
Balance sheet total	157.5	177.4	- 11.2 %
Equity	53.8	51.0	+ 5.5 %
Equity ratio	34.2 %	28.7 %	+ 5.5 %

CANCOM Group's sales revenues

6 months (01/01 - 06/30) (in € million)

CANCOM Group's EBITDA (adjusted)

6 months (01/01 - 06/30) (in € million)

CANCOM Group's EBIT (adjusted)

6 months (01/01 - 06/30) (in € million)

* adjusted for one-off effects (Earnings from differences from capital consolidation (lucky buy)

** adjusted for one-off effects (Earnings from differences from capital consolidation (lucky buy) and depreciation on intangible assets from purchase price allocation

Notes: The figures had to be adjusted in line with IFRS 5 to take into account the regrouping in relation discontinued operations. This overview of key figures is not part of the interim report. Adjusted EBITDA, adjusted EBIT, adjusted net profit and adjusted earnings per share are not defined in IFRS. CANCOM believes that adjusted financial figures are more suitable indicators of operating performance to give readers a clearer picture and ensures greater comparability of data over time.

Preface

Dear Shareholders,

the CANCOM Group's business has continued to perform well over the past few months, with significant growth recorded yet again in both sales revenues and profits. The economic momentum and our strong market position in the IT growth area of cloud computing decisively contributed to the outstanding results of the first half of 2011.

Market research institutions continue to be optimistic about the growth prospects of the IT sector. At the same time, we are preparing to safeguard the Group's future growth. At the general meeting of shareholders in June we resolved to relocate the Group head office to Munich, Germany. This will raise CANCOM's profile among investors and in the European IT channel. Also, the Munich region is the most important high-tech region in Germany, making it ideal for acquiring specially trained and certified IT personnel to strengthen our higher-value services and solutions business. In order to concentrate on our higher-margin business-to-business segment, in July we finally completed the sale of HOH Home of Hardware, which operates predominantly in the business-to-consumer environment.

At CANCOM we are constantly working hard to achieve the sustainable development of the Group. I am convinced that this will be reflected in the performance of the share in the medium term despite the actual situation at the financial markets. Analysts are also still convinced that the CANCOM share has upward potential.

Thank you for your confidence in us.

Kind regards,

Klaus Weinmann, CEO

Consolidated Interim Management Report on consolidated financial statement (page 12 ff)

1. CANCOM's business and the general economic situation

Organisational and legal structure of the CANCOM Group

CANCOM IT Systeme Aktiengesellschaft, based in Jettingen-Scheppach, Germany, performs the central financial and management role for the equity investments held by the CANCOM Group.

Focus of activities and sales markets

One of the three largest independent integrated systems providers in Germany, the CANCOM Group is an IT architect, systems integrator and managed services provider. As a provider of integrated services, its central focus is now on providing IT services in addition to selling hardware and software from prestigious manufacturers. Its range of IT services includes designing of IT architectures and landscapes, and designing and integration of IT systems, as well as systems operation.

The CANCOM Group's customer base therefore includes primarily commercial end-users, from independent professionals to medium and large-sized companies and public-sector institutions.

Explanation of the control system used within the Group

To control and monitor the development of the individual subsidiaries, once a month CANCOM analyses, among other things, their sales revenues, gross profit, operating expenditure and operating profit, and compares these key figures with the original plan as well as the quarterly forecast. Additionally, the Company regularly uses external indicators such as inflation rates, interest rates, the general economic trend and the performance of the IT sector – as well as forecasts for these – for the purpose of management control. The cash management procedures include a daily status investigation.

Research and development activities

As it is purely a services and trading company, CANCOM does not undertake any research activities. Development work is very limited and is principally for the Group's own purposes. Its focus includes software solutions and applications in growth areas such as cloud computing, virtualisation, mobility, IT security and managed services. In addition to further development work on the CANCOM AHP Private Cloud, developments in the first half of 2011 focused on the online segment and on additional modules for a new ERP system of a subsidiary.

Overview of the CANCOM Group's business performance

In the first half of 2011, the CANCOM Group again recorded a significant jump in sales revenues and profits year-on-year, with growth continuing strong in the second quarter of the year.

The figures for the first half of 2011 and the comparative figures for 2010 had to be adjusted in line with the International Financial Reporting Standards (IFRS) to take into account the sale of HOH Home of Hardware GmbH and the intended sale of CANCOM Ltd. UK as discontinued operations. Details are given in the notes to the consolidated statement of income.

The CANCOM Group's consolidated sales revenues for the first half of 2011 were up 23.0 percent year-on-year to € 251.5 million, compared with € 204.4 million in the first half of 2010. The consolidated gross profit was up 15.2 percent, from € 67.1 million to € 77.3 million. The gross profit margin fell from 32.8 percent to 30.7 percent. At € 10.8 million, consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) were up 83.1 percent year-on-year, compared with € 5.9 million in 2010, with an EBITDA margin of 4.3 percent. Consolidated earnings before interest and tax (EBIT) were up 854.4 percent year-on-year, from € 4.1 million to € 7.6 million. The consolidated profit for the first half of 2011 was € 4.5 million, compared

with € 2.1 million in the first half of 2010. This resulted in earnings per share from continuing operations of € 0.44, compared with € 0.24 in the same period of 2010.

Significant events and investments

The Annual General Meeting on 8 June 2011 agreed to change the company's name in CANCOM AG and to relocate the company's headquarters to Munich, Germany.

CANCOM Plaut Managed Services GmbH and Plaut Systems und Solutions GmbH have made a purchase price arrangement on the acquisition of the SAP Hosting Business, Outsourcing and IT Services division that deviates from the contract of sale signed on 29 November 2010. A variable purchase price comprising a fixed total purchase price due for payment on 30 June 2011 has now been agreed.

Employees

As at 30 June 2011 the CANCOM Group employed 2,011 people.

The employees worked in the following areas:

Professional services:	1,400
Sales and distribution:	312
Marketing and product management:	26
Purchasing, logistics and order processing:	109
Central services:	164

The personnel expenses in the first half year were as follows (in € '000):

	First half 2011	First half 2010
Wages and salaries	45,764	40,791
Social security contributions	8,067	7,613
Pension provisions	153	149
Total	53,984	48,553

2. Earnings, financial and assets position of the CANCOM Group

a) Earnings position

The CANCOM Group achieved a significant increase in sales revenues and profits in the first six months of 2011. Consolidated sales revenues were up 23.0 percent year-on-year, from € 204.4 million to € 251.5 million. The organic growth was 17.5 percent.

CANCOM Group sales revenues (in € million) 6 months (01/01 – 06/30)

The very positive trading results can be attributed to the momentum of the economy and, in particular, the Group's strong market position in the IT growth area of cloud computing.

In Germany, sales revenues were up 20.8 percent, from € 192.1 million to € 232.0 million.

In international business, the CANCOM Group's sales revenues were up 58.5 percent, from € 12.3 million to € 19.5 million.

In the e-commerce/trade segment, sales revenues were up 14.5 percent to € 84.4 million, compared with € 73.7 million in 2010. In the IT solutions segment they were up 27.9 percent, from € 130.7 million to € 167.1 million.

The consolidated gross profit for the first six months was up 15.2 percent year-on-year, from € 67.1 million to € 77.3 million. The gross profit margin fell from 32.8 percent to 30.7 percent; this can be attributed to the growth of the trade business due to the sustained upturn in the economy.

CANCOM Group gross profit (in € million)

Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) for the first six months of 2011 were up 83.0 percent year-on-year, from € 5.9 million to € 10.8 million.

CANCOM Group EBITDA (in € million)

6 months (01/01 – 06/30)

Consolidated earnings before interest and tax (EBIT) were up 85.4 percent year-on-year, from € 4.1 million to € 7.6 million.

CANCOM Group EBIT (in € million)

The net income for the first six months of 2011 was € 4.5 million, compared with € 2.1 million in 2010. As a result, earnings per share from continuing operations in the first half of 2011 were € 0.44, compared with € 0.24 in the first half of 2010.

The order position

In the e-commerce/trade segment and parts of the IT solutions segment, the majority of incoming orders are converted to sales within two weeks because of our large delivery capacity. Consequently, the reporting date figures on their own do not give a true picture of our order situation in this area of business, which is why they are not published.

In the IT solutions segment, orders are often given over long periods. At present, the volume of orders is healthy and steady.

Because of the stable services business – which now accounts for about two thirds of the gross profits (total output less materials costs and services rendered) – as well as the healthy condition of the balance sheet, the management feels the Group is in a strong position within the IT sector.

Explanations of individual items on the statement of income

Details on items in the statement of income are given in the notes to the consolidated statement of income.

b) Financial and assets position

Objectives of financial management

The core objective of the financial management of the CANCOM Group is to safeguard its liquidity at all times, to ensure that day-to-day business activities can be continued. In addition, the Group aims to achieve optimum profitability as well as the highest possible credit standing to ensure favourable refinancing rates.

Notes on the capital structure

On the assets side of the consolidated balance sheet, there was a 14.8 percent decrease in current assets between 31 December 2010 and 30 June 2011, from € 120.3 million to € 102.5 million. Cash and cash equivalents were down from € 31.5 million to € 9.2 million, owing to seasonal variations. Assets held for sale were € 8.8 million as at 30 June 2011 concerning the companies HOH Home of Hardware GmbH and CANCOM Ltd. UK. Trade accounts receivable were almost unchanged at € 68.5 million, compared with € 68.0 million at 31 December 2010.

Non-current assets were down to € 55.0 million as at 30 June 2011, compared with € 57.2 million at 31 December 2010.

The liabilities side of the balance sheet shows a significant reduction in current liabilities, which are down 27.9 percent from € 89.8 million to € 70.0 million. This is mainly a result of a reduction in trade accounts payable from € 64.4 million to € 42.7 million.

Non-current liabilities, consisting of liabilities with a residual term of at least one year, are down from € 36.6 million to € 33.7 million.

The total assets are down to € 157.5 million as at 30 June 2011, compared with € 177.4 million as at 31 December 2010.

The nominal equity capital has been increased from € 51.0 million to € 53.8 million since the start of the year, mainly through transfers to net profits. Overall, this resulted in an equity ratio of 34.2 percent at 30 June 2011 compared with 28.7 percent at 31 December 2010.

Further details of the individual balance sheet items can be found in the Notes to the consolidated balance sheet.

Notes to the statement of cash flows

There is typically a negative cash flow from ordinary activities during the year, and there was a negative cash flow of € 12.4 million as at 30 June 2011. This is mainly a result of a reduction in trade accounts payable.

There was a negative cash flow from investing activities of € 5.3 million, compared with a negative cash flow of € 10.4 million in the first half of 2010.

There was a negative cash flow from financing activities of € 3.7 million, compared with a positive cash flow of € 1.2 million in the first half of 2010.

Overall, this resulted in cash and cash equivalents of € 9.2 million, compared with € 5.3 million in 2010.

3. Shares held by members of the Executive and Supervisory Boards as at 30 June 2011

Total number of shares:	10,390,751	100%
Executive Board:
Klaus Weinmann	204,864	1.97%
Rudolf Hotter	0	0.00%
Supervisory Board
Walter von Szczytnicki	6,252	0.06%
Stefan Kober	261,289	2.51%
Raymond Kober	260,891	2.51%
Walter Krejci	0	0.00%
Regina Weinmann	0	0.00%
Petra Neureither	5,000	0.05%

4. Events of particular significance after the reporting date

On 5 July 2011, CANCOM AG sold its entire shareholding in HOH Home of Hardware GmbH for € 3 million. HOH is an online shop offering information technology, telecommunications and home entertainment. By selling HOH, which operates predominantly in the business-to-consumer (B2C) environment, CANCOM plans to concentrate on the higher-margin business-to-business (B2B) segment.

5. Risks of future development

There have been no major changes in the risks of future development at CANCOM since the start of the current financial year. Details of the risks can be found in the annual report for 2010, starting on page 20. The annual report can be downloaded from www.cancom.de or obtained free of charge from the Company.

6. Opportunities for future development

There have been no major changes in the opportunities for future development at CANCOM since the start of the current financial year. Details of the opportunities can be found in the annual report for 2010, starting on page 25.

7. Forecast

The debt situation in some EU countries and in the USA has damped economic forecasts. Nevertheless, the forecasts of the leading German research institutions and trade associations indicate that gross domestic product (GDP) in Germany will rise in 2011 and 2012. On average, GDP is expected to grow by 3.2 percent in the current year.

According to the latest market figures from the German Association of the Information Industry, Telecommunications and New Media, BITKOM, experts expect the German information technology sector to grow by 4.3 percent in 2011, compared with 3.0 percent in 2010. BITKOM's latest economic survey indicates that 74 percent of IT companies expect an increase in sales revenues for 2011, underlining the positive outlook for the sector.

The hardware segment is expected to grow by 5.6 percent, the software segment by 4.5 percent and the IT services segment by 3.5 percent.

Growth of the German IT sector in 2011*

(real change in comparison to 2010 as a percentage)

Forecast: BITKOM, March 2011

The market research organisation IDC also expects the IT industry to expand in 2011 – it puts its growth forecast at 6.9 percent.

The cloud computing segment – in which services are obtained flexibly in realtime via the Internet or within a company network – is particularly booming, so the business prospects for cloud providers such as CANCOM are especially good. According to experts at IDC, EITO and BITKOM, the German market for cloud marketing and outsourcing as a whole is set to grow to around € 20 billion.

In view of the opportunities for future growth in e-commerce, CANCOM is stepping up its activities in the areas of e-procurement and customised shops. Customised shops are web-based shops offering a fixed, individual product range. They offer customers the advantage of ensuring that the infrastructure will be consistent for all orders. This in turn offers CANCOM the opportunity for sustained strengthening of customer loyalty.

CANCOM was early in gearing its business policy to the future IT trends referred to above, and designed its sales and services structure around them. CANCOM has also significantly expanded its market presence as well as improving its customer proximity in the Germanspeaking areas, and is represented all over Germany and Austria by its many service and consulting locations.

Thanks to its proven expertise and outstanding market position in the IT trend segments described, CANCOM will grow faster than the IT market if demand for IT products and services remains steady or indeed continues to increase.

From the current perspective, against the background of the acquisitions made and in consideration of the Group's positive performance, its good positioning in the growth market of cloud computing and the promising economic outlook, the Executive Board expects the year 2011 to bring further growth in sales revenues and profits, with a continued positive financial situation.

8. Management responsibility statement

We confirm, to the best of our knowledge, that the consolidated interim financial statements, prepared in accordance with the applicable principles of financial reporting, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and that the interim management report gives a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks of the anticipated development of the Group for the remaining six months of the financial year.

Jettingen-Scheppach, Germany, August 2011 CANCOM AG

The Executive Board

This document has not been audited. It contains statements and information about the future that are based on the assumptions and estimates of the Executive Board of CANCOM IT Systeme AG. These statements are identifiable by words and phrases such as "plan", "intend", "will", "expect", "feel" etc. and are based on current expectations, assumptions and assessments. Although we feel that these expectations are realistic, we cannot guarantee their correctness, especially in our forecast. The assumptions may be subject to several internal and external risks and uncertainties, which may lead to the actual results deviating considerably, either positively or negatively, from the situations and figures forecast. The following influencing factors are relevant in this respect: changes in the general economic and business situation; changes in interest rates and foreign currency exchange rates; changes in the competitive situation, for instance by the emergence of new competitors, new products and services or new technologies; changes in the consumer habits of target customer groups etc.; and changes to the business strategy. CANCOM does not plan to update its forecasts beyond the legal requirements, nor does it make any commitment to do so.

Consolidated balance sheet (ifrs) – assets

Figures in €'000
Assets	Notes	06/30/2011	12/31/2010
Current assets
Cash and cash equivalents		9,176	31,472
Assets held for sale	B.1.	8,831	0
Trade accounts receivable		68,462	68,014
Other current financial assets	B.2.	2,397	4,663
Inventories		10,248	13,363
Orders in process		1,804	730
Prepaid expenses and other current assets	B.3.	1,595	2,025
Total current assets		102,513	120,267
Long-term assets
Property, plant and equipment		10,482	9,677
Intangible assets		15,864	18,860
Goodwill		23,667	23,682
Investments	B.4.	3,628	3,211
Notes receivable/loans		49	43
Other financial assets		889	920
Deferred taxes arising from temporary differences	B.5.	339	406
Deferred taxes arising from tax loss carryover	B.5.	57	294
Other assets		30	81
Total long-term assets		55,005	57,174
Total assets		157,518	177,441

Consolidated balance sheet (ifrs) – Equity and liabilities

Figures in €'000
Equity and liabilities	Notes	06/30/2011	12/31/2010
Current liabilities
Short term debt and current portion of long-term debt		666	1,196
Profit participation capital and subordinated loans short-term portion		825	413
Trade accounts payable		42,360	64,437
Advanced payments redeived		754	1,525
Other current financial liabilities	B.6.	2,751	3,460
Accrued expenses	B.7.	1,379	1,579
Deferred revenues		1,182	989
Income tax payable		2,684	1,634
Other current liabilities	B.8.	11,093	14,614
Liabilities for assets held for sale		6,343	0
Total current liabilities		70,037	89,847
Long-term liabilities
Long-term debt, less current portion		9,310	9,607
Profit participation capital and subordinated loans		14,072	14,364
Deferred revenues		4,689	5,048
Deferred taxes from temporary differences	B.9.	3,440	4,309
Pension provisions		80	80
Other long-term financial liabilities		404	1,519
Other long-term liabilities	B.7.	1,655	1,654
Total Long-term liabilities		33,650	36,581
Equity
Shared capital		10,391	10,391
Additional paid-in capital		15,904	15,904
Net profit (incl. retained earnings)		27,605	24,768
Currency translation difference and exchange rate difference		-235	-134
Minority interests		166	84
Total equity		53,831	51,013
Total equity and liabilities		157,518	177,441

Income statement (IFRS)

			Q2	6 months
Figures in €'000		04/01/2011	04/01/2010	01/01/2011	01/01/2010
Income statement	Notes	-06/30/2011	-06/30/2010	-06/30/2011	-06/30/2010
Revenues		126,903	106,454	251,523	204,384
Other operating income	C.2.	206	235	437	1,327
Other capitalised services rendered for own account		70	200	71	200
Total operating revenue		127,179	106,889	252,031	205,911
Cost of purchased/
materials and services		-87,729	-73,755	-174,701	-138,845
Gross profit		39,450	33,134	77,330	67,066
Personnel expenses	C.3.	-27,034	-24,171	-53,984	-48,553
Depreciation of property, plant and equipment
and amortisation of intangible assets		-1,599	-999	-3,164	-1,841
Other operating expenses	C.4.	-6,293	-6,156	-12,541	-12,603
Operating income		4,524	1,808	7,641	4,069
Interest and similar income		34	28	65	73
Interest and other expenses		-517	-420	-1,093	-819
Income from equity investments		0	1	0	1
Foreign currency exchange income / losses		-9	-26	-1	-42
Profit before taxes		4,032	1,391	6,612	3,282
Income tax expense	C.5.	-1,210	-435	-2,004	-841
After tax profit
from continuing operations		2,822	956	4,608	2,441
Loss from discontinued operations	C.6.	-67	-256	-130	-355
Net income for the year		2,755	700	4,478	2,086
thereof attributable to the
shareholders of the parent		2,712	690	4,396	2,072
thereof attributable to minority interests	C.7.	43	10	82	14
Average number of
shares outstanding (basic)		10,390,751	10,316,422	10,390,751	10,318,520
Average number of
shares outstanding (diluted)		10,390,751	10,316,422	10,390,751	10,318,520
Earnings per share
from continuing operations (non-diluted)		0.27	0.09	0.44	0.24
Earnings per share
from continuing operations (diluted)		0.27	0.09	0.44	0.24
Earnings per share
from discontinued operations (non-diluted)		-0.01	-0.02	-0.01	-0.03
Earnings per share
from discontinued operations (diluted)		-0.01	-0.02	-0.01	-0.03

Consolidated cash flow statement (IFRS)

Figures in €'000 Cashflow	Notes	01/01/2011 -06/30/2011	01/01/2010 -06/30/2010
Cash flow from ordinary activities:
Net profit for the period before taxes and minority interests		6,612	3,282
Adjustments:
+/- Depreciation of property, plant and equipment, and amortisation of intangible assets		3,164	1,841
+/- Changes in long-term accruals		1	-301
+/- Changes in current accruals		-146	-1,705
+/- Gains/losses on the sale of intangible assets,
property, plant and equipment and financial assets		139	8
+ Interest expense		1,028	746
+/- Changes in inventories		-1,511	-3,778
+/- Changes in trade accounts receivable and other accounts receivable		-1,843	-1,974
+/- Changes in trade accounts payables and other accounts payable		-18,399	-7,605
+/- Interest payments and rebates		-130	-103
+/- Income tax payments and rebates		-1,199	-67
+/- Non-cash expenses and income		27	-584
+/- Cash inflow/outflow from discontinued operations		-147	-1,014
Net cash from operating activties		-12,404	-11,254
Cash flow from investing activities
+/- Acquisition of subsidiaries and equity instruments of other companies		-2,193	-5,442
+/- Cash from acquisitions		0	-724
- Payments for additions to intangible assets as well as property, plant and equipment		-3,433	-4,460
+ Income from disposal of intangible assets, property, plant and equipment and financial assets		270	107
- Cash used in disposal of equity holdings		0	0
+ Interest received		65	73
Net cash used in investing activities		-5,291	-10,446
Cash flow from financing activities
+ Take-up of long-term financial liabilities		0	1,500
- Repayment of long-term financial liabilities (incl. short-term portions)		-893	-362
+/- Changes in short-term liabilities		4	2,364
- Interest paid		-781	-650
- Dividends payed		-1,559	-1,546
+ Inflows from sale of own shares		0	0
- Outflows from purchases of own shares		0	-94
+/- Cash inflow / outflow finance lease		-504	-97
+/- Cash inflow / outflow from discontinued operations		0	50
Net cash used in financing activities		-3,733	1,165
Net change in cash and cash equivalents		-21,428	-20,535
+/- Changes in value resulting from foreign currency exchange		-99	-30
+/- Cash and cash equivalents as at beginning of period		31,472	25,836
Cash and cash equivalent sat end of period		9,945	5,271
Breakdown:
Cash		9,176	5,271
Cash from discontinued operations		769
		9,945	5,271

Consolidated statement of changes in equity (IFRS)

		Share capital	Additional paid-in capital	Retained earnings	Foreign currency translation reserve	Exchange rate difference reserve	Revaluation reserve	Net profit loss	Own shares at acquisition costs	Total investors parent company	Minority interest	otal equity cash
	Shares
	units'000 in €'000		in €'000	in €'000		in €'000 in €'000 in €'000			in €'000 in €'000	in €'000 in €'000		in €'000
31 December 2009		10,391 10,391	15,441	122	-279	0	-153	18,507	-165	43,864	5	43,869
Changes in reserves:
Transfer netprofit/retained earnings				10,483				-10,483		0		0
Purchase of own shares									-94	-94		-94
Sales of own shares			463						259	722		722
Distribution								-1,546		-1,546		-1,546
Comprehensive income for the period					-10	155		7,820		7,965	78	8,043
Purchase of minority interests				18						18	129	147
Impact of derecognition of minority interests										0	-128	-128
31 December 2010		10,391 10,391	15,904	10,623	-289	155	-153	14,298	0	50,929	84	51,013
Changes in reserves:
Transfer netprofit/retained earnings				6,465				-6,465		0		0
Distribution								-1,559		-1,559		-1,559
Comprehensive income for the period					-1	-100		4,396		4,295	82	4,377
Purchase of minority interests				0						0		0
Impact of derecognition of minority interests										0		0
30 June 2011		10,391 10,391	15,904	17,088	-290	55	-153	10,670	0	53,665	166	53,831

Statement of comprehensive income (IFRS)

		Q2		6 months
in €'000	04/01/2011 -06/30/2011	04/01/2010 -06/30/2010	01/01/2011 -06/30/2011	01/01/2010 -06/30/2010
Net income for the period	2,755	700	4,478	2,086
Other income
Currency translation difference	0	40	-1	31
Exchange rate difference	137	0	-144
Income taxes	-41	-13	44	-10
Other after-tax income for the period	96	27	-101	21
Comprehensive income for the period	2,851	727	4,377	2,107
thereof attributable to the shareholder of the parent	2,808	717	4,295	2,093
thereof attributable to the minority interests	43	10	82	14

Segment information (IFRS)

	e-commerce/trade 06/30/11			IT Solutions
		06/30/10	06/30/11	06/30/10
	€'000	€'000	€'000	€'000
Sales revenues
– External sales	84,424	73,661	167,099	130,723
– Intersegment sales	1,550	4,239	30,536	12,657
– Total sales revenues	85,974	77,900	197,635	143,380
– Cost of purchased materials and services	-70,889	-64,728	-126,862	-87,687
– Personnel expenses	-8,292	-7,360	-43,684	-39,420
– Other operative income and expenses	-2,255	-2,607	-18,000	-10,831
EBITDA	4,538	3,205	9,089	5,442
– scheduled depreciation and amortisation	654	660	2,429	1,097
Operating Income (EBIT)	3,884	2,545	6,660	4,345
– Interest income	19	28	34	63
– Interest expenditure	-279	-192	-318	-250
– Income from equity investments
– Write-downs of financial assets
– Share in profit or loss of joint ventures
accounted for by the equity method
Profit/loss from ordinary activities	3,624	2,381	6,376	4,158
– Profit/loss from extraordinary activities	0	0	0	0
– Foreign currency exchange gains / losses
Pre-tax profit/loss	3,624	2,381	6,376	4,158
– Income taxes
– Discontinued operations	-130	355	0
Consolidated profit/loss for the period
thereof attributable to the shareholders
of the parent
thereof attributable to minority interest
Other information
– Assets 1)	94,001	62,888	55,324	66,365
– Investments 1)	1,416	903	1,947	6,803

1) Segment assets and investments including goodwill from consolidation of capital

2) Tax assets

Segment information (IFRS)

06/30/10 06/30/11 06/30/10 €'000 €'000 €'000 -16,896 -16,896 251,523 204,384 13,570 -174,701 -138,845 0 -53,984 -48,553 3,326 -12,033 -11,076 0 10,805 5,910 0 3,164 1,841 0 7,641 4,069 -318 65 73 318 -1,093 -819 1 0 1 0 0 0 0 0 0 1 6,613 3,324 0 0 0 -42 -1 -42 -41 6,612 3,282 -841 -2,004 -841 0 -130 -355 4,478 2,086 4,396 2,072 82 14 2,780 157,518 136,093 4,166 11,030	consolidated	Reconcilation		Other companies		Total operating segments
		06/30/11	06/30/10	06/30/11	06/30/10	06/30/11
		€'000	€'000	€'000	€'000	€'000
			0	0	204,384	251,523
		-32,086	0	0	16,896	32,086
		-32,086	0	0	221,280	283,609
		23,050	0	0	-152,415	-197,751
		0	-1,773	-2,008	-46,780	-51,976
		9,036	-964	-814	-13,438	-20,255
		0	-2,737	-2,822	8,647	13,627
		0	84	81	1,757	3,083
		0	-2,821	-2,903	6,890	10,544
		-180	300	192	91	53
		180	-695	-676	-442	-597
		0
		0	0		0	0
		0	0	0	0	0
		0	-3,216	-3,387	6,539	10,000
		0			0	0
		-1	0		0	0
		-1	-3,216	-3,387	6,539	10,000
		-2,004 0	0	0	355	-130
		Reconcilation 2)
		735	4,060	7,458	129,253	149,325
			3,324	803	7,706	3,363

NOTES

to the consolidated accounts for the quarter ended 30 June 2011

A. The principles adopted for the consolidated financial statements

1. General information

The consolidated interim financial statements of CANCOM AG (formerly CANCOM IT Systeme Aktiengesellschaft) and its subsidiaries ("the CANCOM Group" or "the Group") for the financial year 2011 were drawn up according to International Financial Reporting Standards or International Accounting Standards (IFRS/IAS).

The consolidated interim financial statements of the CANCOM Group are drawn up and published in euro.

This consolidated interim financial report is condensed and was drawn up in compliance with IAS 34 Interim Financial Reporting. It should be read in conjunction with the IFRScompliant consolidated financial statements for the financial year 2010, which can be downloaded from www.cancom.de.

2. Reporting entity – scope of consolidation

The consolidated financial statements include CANCOM AG and all subsidiaries in which CANCOM AG has either a direct or an indirect majority shareholding, or in which it holds the majority of the voting rights. These subsidiaries are fully consolidated.

CANCOM AG has sold its shares in HOH Home of Hardware GmbH. The sale is documented by a purchase and transfer agreement drawn up by notary Klaus Racky and signed on 5 July 2011. The effective date of transfer is 31 July 2011.

The sale price was € 3,000,000.

3. Accounting and valuation policies

The consolidated interim financial report is compiled using basically the same accounting and valuation methods as those used for the consolidated financial statements for the financial year 2010.

B. Notes to the consolidated balance sheet

1. Assets held for sale

Since HOH Home of Hardware GmbH was sold with effect from 31 July 2011 and it is intended to sell CANCOM Ltd. in the near future, all the assets of these companies are recorded under assets held for sale.

2. Other current financial assets

This item includes bonuses due from suppliers (€ 1,127k), a claim to the payment of a purchase price (€ 694k), claims in respect of loans (€ 203k), receivables from employees (€ 162k), creditors with a debit balance (€ 107k), marketing revenue (€ 98k) and receivables from former shareholders (€ 6k).

3. Prepaid expenses, deferred charges and other current assets

This item mainly consists of other current assets such as tax refunds (€ 441k), compensation for damages (€ 42k), commission income (€ 40k), rent receivable (€ 28k) and receivables from social insurance agencies (€ 27k).

The prepaid expenses and deferred charges (€ 993k) also include deferred insurance premiums.

4. Financial assets

The financial assets consist of shares in Plaut Aktiengesellschaft. CANCOM AG has no significant influence on Plaut Aktiengesellschaft. The shares are recognised at the closing price of € 0.855 in the Xetra trading system as at 30 June 2011. The price difference is shown under exchange rate difference in the consolidated statement of comprehensive income.

5. Deferred tax assets

The deferred tax assets are as follows:

Deferred taxes resulting from	Temporary	Tax loss
	differences	carryforward
	€'000	€'000
As at 1 January 2011	406	294
Derecognition from reclassification
to assets held for sale	0	-88
Tax expenditure from profit and loss calculation	-67	-7
Tax saving from profit and loss calculation
included in discontinued operations	0	-142
As at 30 June 2011	339	57

As at 30 June 2011, the CANCOM Group had corporation tax loss carryovers of € 9.8 million and trade tax loss carryovers of € 9.0 million. The unused corporation tax losses for which no deferred tax claim was recognised in the balance sheet amounted to € 9.5 million, and the trade tax loss carryovers for which no deferred tax claim was recognised amounted to € 8.1 million. The amounts referred to include components of € 8.7 million (corporate tax) and € 8.1 million (trade tax), which have been called into question because of the EU Commission's legal interpretation of the restructuring clause in Section 8 c of the German Corporate Tax Act (Körperschaftsteuergesetz, KStG) and cannot be used at present. If this amount cannot ultimately be used, the loss carryovers will amount to € 0.3 million (corporate tax) and € 0.9 million (trade tax).

The deferred taxes from temporary differences are the result of other provisions (€ 130k), differences in goodwill (€ 125k), elimination of sales within the Group (€ 66k), intangible assets (€ 16k) and pension provisions (€ 2k).

6. Other current financial liabilities

This item includes purchase price liabilities (€ 1,226k), debtors with a credit balance (€ 1,116k), outstanding bills of costs (€ 399k) and liabilities to the Supervisory Board (€ 10k).

7. Other provisions

Provisions mainly include guarantees and warranties (€ 1,457k), severance payments (€ 587k), additional leasing costs (€ 390k), salaries (€ 323k), contingent risks (€ 130k) and provisions for financial statement costs (€ 103k).

The total provisions include long-term provisions of € 1,655k, which are disclosed under other non-current liabilities. They comprise guarantees and warranties (€ 761k), a provision for severance payments which is legally mandatory in Austria (€ 466k), anniversaries (€ 184k), additional leasing costs (€ 113k), provisions for partial retirement (€ 98k) and provisions for contingent risks (€ 33k).

8. Other current liabilities

Other current liabilities mainly include holiday and overtime entitlements (€ 3,072k), bonus payments to Board members and employees (€ 2,589k), sales tax (€ 2,467k), tax on wages and salaries, and church tax (€ 1,822k), trade association payments (€ 282k), wages and salaries (€ 274k), social security contributions (€ 217k) and compensation levy for non-employment of the severely handicapped (€ 83k).

9. Deferred tax liabilities

The deferred tax liabilities are as follows:

	€'000
As at 1 January 2011	4,309
Derecognition from revaluation of
financial instruments recognised directly in equity	-44
Derecognition from reclassification as
liabilities connected with assets held for sale	-509
Tax expenditure from profit and loss calculation	-305
Tax saving from profit and loss calculation
included in discontinued operations	-11
As at 30 June 2011	3,440

The deferred tax liabilities arise from deviations from the tax balance sheets. They are the result of the revaluation of intangible assets (€ 3,377k), capital from profit-participation rights and subordinated loans (€ 17k), orders in process (€ 13k), other provisions (€ 7k) and pension provisions (€ 2k).

They are recognised at an individual tax rate of between 25 percent (for the Austrian subsidiary) and 32.98 percent.

C. Notes to the consolidated statement of income

1. Segment information (see page 18-19)

A description of the segments subject to mandatory reporting can be found on page 70 of CANCOM's annual report for 2010.

Reconciliation

Reconciliation shows items not directly connected with the operating segments and the other companies. They include sales within the segments, and the income tax expense. The income tax expense is not a component of the profits of the operating segments. Since the tax expense is allocated to the parent company where the parent company is the taxable entity, the allocation of the income tax does not exactly correspond to the structure of the segments.

Information on geographical regions

	Sales revenue by customer location			Sales revenue by company location
		First 6months 2011 First 6months 2010		First 6months 2011 First 6months 2010
	€'000	€'000	€'000	€'000
Germany	225,355	188,625	232,040	192,104
Outside Germany	26,168	15,759	19,483	12,280
Group	251,523	204,384	251,523	204,384

		Non-current assets
		30 June 2011 31 December 2010
	€'000	€'000
Germany	48,800	50,795
Outside Germany	2,132	2,425
Group	50,932	53,220

Non-current assets include property, plant and equipment, intangible assets, goodwill and other non-current assets. Financial instruments and deferred tax claims are not included.

2. Other operating income

The other operating income is made up of the following:

in €'000	01/01/ - 06/30/2011	01/01/ - 06/30/2010
Rent	3	28
Negative goodwill from
capital consolidation	143	584
Income not relating to the period	75	403
Government grants	208	170
Other operating income	8	142
Total	437	1,327

Income not relating to the period mainly includes income from written-down receivables, the proceeds of the sale of non-current assets and income from the reduction of allowances for bad debts on accounts receivable. In 2010 the item also included income from the derecognition of debtors with a credit balance.

3. Personnel expenses

The personnel expenses consist of the following:

153	149
	7,613
45,764	40,791
01/01/ - 06/30/2011	01/01/ - 06/30/2010
	8,067

4. Other operating expenses

The other operating expenses consist of the following:

in €'000	01/01/ - 06/30/2011	01/01/ - 06/30/2010
Office space	2,445	2,722
Insurance and other charges	366	514
Motor vehicles	2,940	2,729
Marketing expenses	576	535
Stock exchange, entertainment expenses	220	254
Hospitality and travel expenses	1,348	1,032
Delivery costs	1,086	1,029
Third-party services	872	866
Repairs, maintenance, leasing	418	648
Communication and office expenses	953	868
Legal and consultancy expenses	243	449
Fees/charges, cost of money transactions	190	192
Allowance for bad debts	11	0
Other operating expenses	873	765
Total	12,541	12,603

5. Income tax

The rate of income tax for German companies was 30.27 percent (2010: 31.53 percent). This is made up of corporation tax, trade tax and the solidarity surcharge. The reduction in the income tax rate is owing to the reduction of the average rate of trade tax. The divergence between the tax expenses reported and those at the tax rate of CANCOM AG is shown below:

in €'000	01/01/ - 06/30/2011	01/01/ - 06/30/2010
Profit before tax	6,400	2,913
Expected tax expense at rate for
German companies
(30.27 percent; 2010: 31.5 percent)	1,937	918
- Difference from tax paid outside Germany	-3	-61
- Change in value adjustment of
deferred tax assets on loss carryforwards	93	-68
- Tax-free income/non tax-relevant
capital losses	-1	0
- Actual income tax not relating to the period	-8	18
- Permanent differences; non-deductible
operating expenses, and additions and
reductions due to trade tax	140	78
- Negative goodwill from
capital consolidation	-33	-184
- Other	9	-13
- Tax saving recognised under
discontinued operations	-130	153
Total Group income tax	2,004	841

The actual tax rate is calculated as follows:

	€'000
Income before tax	6,400
Income tax	2,004
Actual expense rate	31.31%

Income tax comprises the income tax paid or owed in the individual countries and also the deferred taxes:

in €'000	01/01/ - 06/30/2011	01/01/ - 06/30/2010
Actual income tax paid	2,235	384
Deferred taxes:
Assets	74	514
Liabilities	-305	-57
	-231	457
Group income tax	2,004	841

6. Profit/ loss from discontinued operations

The impact of discontinued operations on the consolidated statement of income is a loss of € 130k (2010: loss of € 355k).

This amount includes income (including other operating income) of € 31,169k (2010: € 34,962k), expenditure of € 31,169k (2010: € 35,472k) and a pre-tax result of € 0k (2010: pre-tax loss of € 508k). The related income tax expenditure was € 130k (2010: gain of € 153k).

The areas concerned are detailed below:

HOH Home of Hardware GmbH:

Since it was already intended to sell the shares in HOH Home of Hardware GmbH before 30 June 2011, the profit of the company is shown under discontinued operations. The figures for 2010 have been adjusted accordingly. The profit attributable to HOH Home of Hardware GmbH amounts to € 95k (2010: loss of € 254k).

The CANCOM Group sold HOH Home of Hardware GmbH, which operates predominantly in the business-to-consumer (B2C) environment, in order to concentrate on the highermargin business-to-business (B2B) segment.

CANCOM Ltd.:

The Group plans to sell its shares in CANCOM Ltd., UK in the near future. The loss of the company is therefore shown under discontinued operations and the figures for 2010 have been adjusted accordingly. The loss attributable to CANCOM Ltd. amounted to € 225k (2010: € 221k). The decision to sell the company is based on the CANCOM Group's intention to withdraw from the B2C business.

7. Minority interests

Minority interests account for 49 percent of acentrix GmbH's net income for the year (€ 82k).

D. Other disclosures

1. Related party disclosures

For the purposes of IAS 24, Klaus Weinmann can be considered a related party who can exercise a significant influence on the CANCOM Group, both as an Executive Board member and as a shareholder in CANCOM AG. Rudolf Hotter, the other Executive Board member, is also a related party for the purposes of IAS 24, as are the members of the Supervisory Board.

There were no receivables or payables with respect to related parties at the balance sheet date.

Since 1 July 2007, a consultancy agreement has been in place between CANCOM AG and the Chairperson of its Supervisory Board, Walter von Szczytnicki. The contract was drawn up on 9 March 2007 and approved in accordance with Section 114 of the German Stock Companies Act (Aktiengesetz, AktG), and provides for an annual remuneration of € 60,000. The remuneration paid in the financial year 2011 therefore amounted to € 60,000.

Transactions with related parties were settled in the same way as arm's length transactions.

2. Shares held by members of the Executive and Supervisory Boards (at the balance sheet date)

A list of shareholdings can be found on page 10 of this interim report.

3. Equity interests in the Company as defined in Section 20 IV of the German Stock Companies Act (Aktiengesetz, AktG)

In the first half of 2011 CANCOM AG received no written notice from any shareholder disclosing a majority shareholding as defined in Section 20 of the above Act.

Interim report

3-Monatszahlen 2007 6-months-report

Tel.: +49 82 25 / 9 96-1015 Fax: +49 82 25 / 9 96-4-1015 E-Mail: IR@CANCOM.DE